Monday, September 10, 2012

From Romney's Official Web Site - His Tax Plan explained

Romney and Ryan

While on the Campaign trail we hear a lot of platitudes and rhetoric from Romney and Ryan but very little factual information on how they plan to improve our economic condition. The Romney tax plan has been one of these kinds of issues.
So for this session, I will review the actual facts as presented by Romney on his official web site, http://www.mittromney.com When I am done, I think you'll understand why he is so quiet about it on the campaign trail. Those lines that are in quotes are extracted from Romney's web site. Those lines that follow the quoted lines are my explanatory comments.

“To
repair the nation’s tax code, marginal rates must be brought down
to stimulate entrepreneurship, job creation, and investment, while
still raising the revenue needed to fund a smaller, smarter, simpler
government. The principle of fairness must be preserved in federal
tax and spending policy.”

“Lower
marginal tax rates secure for all Americans the economic gains from
tax reform.”The following paragraphs cite the various steps in Romney's plan.

Romney's Tax Plan For Individuals:

“Make
permanent, across-the-board 20 percent cut in marginal rates"

Marginal rates have the greatest effect on the wealthiest of taxpayers. A
twenty percent rate cut is a huge amount but only makes a real
difference to the wealthiest among us. Add to that the tax
loop-holes that are only available to the wealthy and soon middle
class America will not only be paying a higher tax percentage than
the wealthy, but some may even pay more in absolute tax dollars than
the rich.

“Maintain
current tax rates on interest, dividends, and capital gains”

The
categories of income included in interest, dividends and capital
gains are used almost exclusively by the wealthy. The current tax
rates for these are very low with capital gains as low as 15%. With
the many tax loop-holes available to the ultra-rich, this tax rate is
already lower than that for most wealthy taxpayers. The point is
that this tax favoritism is again directed toward the rich. Most of
the middle-class will have almost no tax savings at all because they
do not have income from investments.

Again,
these categories are already non-existent for most middle-class
Americans. The estimated AGI income of the Middle class Americans is
around $50,000. About 94% of America has AGI less than $100,000. Ask yourself how much of your taxable income (not 401K investments) comes from cash stock trades done throughout the
year. Do you understand
that Romney's plan is targeting benefits for the wealthy?

“Eliminate
the Death Tax”

This
tax is already non-existent for middle class Americans unless an
individual has over $5,000,000 in assets. And who do you think would
benefit from such a tax elimination? Let me give you a clue. It is
estimated that the heirs of the each of Koch brothers would benefit
by nearly $8 billion dollars if this tax was eliminated

“Repeal
the Alternative Minimum Tax (AMT)”

The
AMT is paid only if the regular tax amount would be less than the AMT
amount. It is not used in addition to the regular tax rate, but as
the name implies, as an alternative to the regular rate. It is
normally required by individuals and Corporations with incomes over
$200,000. Since Romney is proposing to make the regular tax rates
for the wealthiest individuals much less, he must repeal the AMT, or
his favoritism to the wealthy would be over-ridden by the AMT. So
this strategy is not to benefit the middle-class, but instead to
ensure that his tax favoritism for the wealthy stays in tact.

Romney's
Corporate Tax Plan:

“Cut
the corporate rate to 25 percent”

Romney's
tax plan for Corporations calls for a 10% reduction in tax rates.
Similar to the plan for wealthy individuals it goes without saying
that Corporate Tax initiatives would favor the wealthiest in America.
It has very little benefit on the middle class. No jobs will be
created because Corporations have their taxes cut unless demand
increases. The American worker is the source of nearly 75% of the
demand in America. Reducing taxes for the rich will only benefit the
rich as it has for the last thirty years with very little improvement
in jobs or take-home pay for workers. When more workers are employed
and wages are improved, demand will increase. This starts from the
middle-class out and not from the top down.

“Strengthen
and make permanent the R&D tax credit”

This
tax advantage is intended to increase spending on Corporate Research.
It is difficult to know how much of an impact that this tax credit
has had on the economy but it is known what kind of tax advantages
are had by Corporations because of it. A study by Ernst and Young in
2005 reported that 17,700 Corporations claimed $6.6 Billion in R&D
Tax credits.

“Switch
to a territorial tax system”

This
is Romney's way of allowing American Corporations to escape paying
taxes on any business carried out in foreign countries. A
territorial Tax system is one that only taxes income earned in the
United States. This would be a huge loop-hole for Corporate America
to escape paying their fair share of taxes. It is difficult to
estimate how much revenue would be lost since it would likely change Corporate practices to take advantage to the
greatest extent possible. It is easy to say that the reduction in
Corporate tax revenue would be extremely high and outsourcing of
plants and jobs would likely be increased to the max.

“Repeal
the corporate Alternative Minimum Tax (AMT)”

For
the same reason as the individual AMT repeal, this would be necessary
if Romney's other reductions in taxes are to be effective in reducing
taxes for the wealthy.

Ultimately, Romney's tax plan would favor the wealthiest of Americans and do little for the middle class. With a territorial tax it may even hurt the middle class by taking more jobs out of the country. And who do you think will get stuck paying the taxes that are being lifted from the rich? You guessed it...Middle-class America.

If you hear Romney and Ryan proclaim that they are for the middle class during their campaign tour, now you'll know that they are both compulsive liars who will say anything to get your vote.

Like sheep to the slaughter, millions of our middle class American Republicans are being led astray by the slick double-talk of their so-called concerned Republican leaders.

Save your vote and your job. Vote a total Democratic ticket this November.